Oil sinks to near $92 on China manufacturing data

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Last Updated: Wed, May 01, 2013 12:15 hrs

$92 a barrel on Wednesday after data showed a slowdown in China's manufacturing growth and a rise in U.S. crude stocks.

By early afternoon in Europe, benchmark oil for June delivery was down $1.18 to $92.28 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.04 to finish at $93.46 per barrel on Tuesday in anticipation of another increase in U.S. crude supplies.

Most European markets were closed Wednesday for the May Day holiday.

The China Federation of Logistics and Purchasing, an industry group, released data Wednesday showing that manufacturing grew at a slower pace in April and that export orders had been declining steadily. The federation's purchasing managers' index fell to 50.6 in April from 50.9 in March. On a 100-point scale, numbers above 50 indicate an expansion.

The pace stoked fears that the recovery in the world's second-largest economy might not meet expectations.

Investors, meanwhile, are also waiting for information on U.S. stockpiles of crude and refined products. Analysts surveyed by Platts estimate that oil supplies rose by 1.4 million barrels in the week ended Friday. The report from the Energy Department's Energy Information Administration — the market benchmark — will be released later Wednesday.

On Tuesday, the American Petroleum Institute said U.S. crude stocks added 5.2 million barrels last week.

Markets will also be paying attention to the U.S. Federal Reserve's policy statement to be released later Wednesday.

Expectations are that the Fed will sustain its easy monetary policy to stimulate economic growth. Oil prices are seen benefiting from loose monetary policies because higher growth translates into added oil demand and because ample money supply weakens the dollar and makes crude cheaper for traders using other currencies.

Brent crude, which is used to set prices of oil from the North Sea used by many U.S. refiners, was down $1.38 to $100.99 on the ICE Futures exchange in London.